Ease of doing business in India

Ease of doing business in an economy largely depends on the quality of governance and prevailing rules and regulations. Availability of resources and fiscal benefits are not enough to simplify the process, hence in order to promote the ease of doing business in India, the simplification of rules and regulations is imperative. Countries must create a hassle-free environment for their entrepreneurs and businessmen to expand globally by ensuring the availability of technology and personalized processes. Measuring the ease of doing business by determining the regulatory environment and framework is important for policymakers. The ‘EoDB Index’ was issued by the World Bank in 2004 and is a widely accepted measure today. The ease of doing business in India can be analyzed by studying India’s performance on this index.

The EoDB Index is an indicator of the regulatory framework and business environment in an economy. It incorporates 10 sub-indices, specifically – starting a business, registering property, paying taxes, dealing with construction permits, getting credit, trading across borders, resolving insolvency, getting electricity, protecting minority investors and enforcing contracts. General conditions like infrastructure, closeness to market are not included. This Index too has limitations and does not entirely depict the business environment in an economy as it does not include infrastructure and inflation. The recent EoDB rankings cover 190 countries and India is stuck in the 130s since the year 2010. Since 2015, two cities namely Mumbai and Delhi have been considered for the rankings whereas previously only Mumbai was considered. India’s latest rankings are the lowest amongst the BRICS countries but it has shown substantial improvement in its ranking from 2004 to 2016. Reforms like commercial electricity connection, simplifying border and documentary processes for trade, introduction of electronic systems for taxes and ease in the process of enforcing contracts have significantly contributed to the improvement.

A majority of reforms have been implemented at the state level to improve India’s rankings on the global scale. The overall national implementation saw a rise from 32% to 48.93% and the states making significant progress included Andhra Pradesh, Gujarat, Madhya Pradesh and Chhattisgarh. Reforms like online provision and a single window system for all approvals required for industries, online inspection systems and setting up of e-courts in interest of improving the system of enforcing contracts, were carried out in these states. It has also been ensured that the system is made more transparent.

The government can carry out more reforms to strengthen the framework. The incorporation of feedback and evaluation of reforms would prove to be beneficial in constructing future assessments. Online and hassle-free systems must be developed further to provide services in one window to investors. Improvisation in the framework would strengthen the ease of doing business in India.

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